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The Race between the Czech Republic and Turkey for Hyundai's Investment in Europe

Author

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  • Emin Akcaoglu

    (Izmir University of Economics)

  • Cengiz Erol

    (Izmir University of Economics)

Abstract

This study examines why the Hyundai Motors Corporation (HMC) decided to invest in the Czech Republic in 2005 rather than investing in Turkey, within a conceptual framework based on mainly Dunning's, Porter's and Knickerbroker's earlier works. The paper argues that locational advantages, for instance, in terms of infrastructure and industry clusters or proximity to target markets could be far more important than anything else especially for the automobile industry while a foreign direct investment (FDI) decision is made. Such other issues as state capacity and skillful bargaining could also be introduced to the analysis but definetely after the analysis of the major fundamental reasons behind FDI attraction. Therefore, to understand such complexities, the race between the CzechRepublic and Turkey for the Hyundai's USD1.5-billion manufacturing investment for the European market would be a useful case.This study, argues that the country-specific locational advantages that Turkey could offer to HMC at that time were not comparable with those of the Czech Republic. This was the major reason why the company decided to invest in the latter. As a result, we argue that those governments aiming to attract FDI should first focus on creating such an environment which provides significant locational advantages for multinational corporations.

Suggested Citation

  • Emin Akcaoglu & Cengiz Erol, 2011. "The Race between the Czech Republic and Turkey for Hyundai's Investment in Europe," Transnational Corporations Review, Ottawa United Learning Academy, vol. 3(4), pages 71-86, December.
    • Handle: RePEc:oul:tncr09:v:3:y:2011:i:4:p:71-86
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    Keywords

    FDI; MNCs; Hyundai; automobile; policy;
    All these keywords.

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